Quoted: Chewing on free food in Silicon Valley — and taxes

“I buy my lunch with after-tax dollars. And I have to pay taxes to support free meals for those Google employees.”

Martin J. McMahon, Jr., tax-law professor at the University of Florida, says free food at work — a sacred Silicon Valley tech company perk — should be treated as taxable income, saying we all pay the price for the gourmet goodness that employees at places such as Google, Facebook, Yahoo, Twitter and Zynga get to indulge in. Does the taxman care? Experts say it depends on whether companies serve up the free food as a convenience or as compensation. One tax attorney told the Wall Street Journal he has seen Silicon Valley tech companies settle with the IRS after an audit, include the value of the free food in employees’ future paycheck stubs, then pay the workers extra to cover their bigger tax bills. And if free food were to be taxed? The WSJ estimates that Google workers who chow down on a couple of free meals a day could be on the hook for an extra $4,000 to $5,000 a year.

 

Photo by Rick E.Martin/Mercury News archives

 

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  • Rick

    Should the costs of heating and cooling also be treated as taxable income? Should the lights? Should the parking space? Cubicle rent?

  • Doug Pearson

    This is just the tip of the iceberg. I think Adjusted Gross Income (AGI) should include the value of free or reduced-price meals. I think it should also include the value of other benefits, e.g., unemployment insurance payments, food stamps. (Perhaps it already does. My W2 form appears to say I pay taxes on unemployment insurance premiums, implying to me that, like other insurance proceeds, the unemployment insurance payments have already been taxes. On the other hand, it seems to me that I pay taxes on my payroll taxes, then pay taxes again when I get Social Security payments–but not Medicare payments.) Economists consider that the employer’s share of payroll taxes are effectively part of the pay of the employee; so it should be included in the employee’s AGI. Does that mean the employee’s taxes should go up accordingly? Not necessarily. That’s what tax credits are for. I’m just saying they should be explicit, rather than hidden.

    And, I’m also saying taxes–especially federal income taxes–are way too complicated.

  • bob

    Pretty sure his tax dollars never enter the picture. It may be a business expense, but it’s not a deductible one, because it’s not required in order for the business to do business. The people who pay for those free lunches are googles customers, not tax dollars.

  • Curt

    Lets add another level of accounting!
    Lets have some snacks during the meeting . . and add 30-50% to the cost of the snacks due to taxes. (Do we then need to itemize who ate what?)

    Just because i’m envious of the google lunch doesn’t mean we should shut it down by taxation.

  • RegularGuy

    When the government distributes free food, it’s called a ‘benefit’, but when a company does the same, it’s called ‘taxable income’?

    Typical government – they have to be in your knickers at all times.

  • mma007
  • mma007
 
 
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